Why is Strait of Hormuz Strategically so Critical?

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(Image Courtesy: www.kataeb.org)

The Strait of Hormuz, a vital shipping route linking Middle East oil producers to markets in Asia, Europe, North America and beyond, has been at the heart of regional tensions for decades.

Twenty per cent of the global oil supply flows through the strait, a narrow stretch of water that separates countries like Iran, Iraq and Kuwait from the rest of the world.

Between May 15 and June 15, more than 1,000 tankers travelled the strait, with many destined for places as far away as China.

It is this strategic passage that Iran has repeatedly threatened to block, and has attempted to destabilise the flow of oil through the strait. Six tankers have been attacked since May amid escalating tensions with Iran.

Why is the Strait of Hormuz so strategic?

Most crude exported from Opec members Saudi Arabia, the UAE, Kuwait and Iraq is shipped through the waterway. During the 1980-88 Iraq war, the two sides sought to disrupt each other’s oil exports in what was known as the Tanker War.

What do the numbers say?

About 17.2 million bpd of crude and condensates were estimated to have been shipped through the Strait in 2017 and about 17.4 million bpd in the first half of 2018, according to oil analytics firm Vortexa. With global oil consumption standing at about 100 million bpd, that means almost a fifth passes through the Strait.

How is the tension linked to US sanctions?

In the past year, the US has imposed new sanctions on Iran meant to cripple the country over its nuclear programme. Some of the measures have targeted the country’s oil exports. But Iran, in defiance, confirmed yesterday that it had started enriching uranium at 20 per cent levels.

What will be the impact of the tension?

If tensions persist, disruptions along the strait, where the shipping channel is barely 3km wide, could be felt in India, China and dozens of countries that buy Middle Eastern oil in bulk.

Are there alternate routes for Gulf oil?

The UAE and Saudi Arabia have sought to find other routes to bypass the Strait, including building more oil pipelines. Meanwhile, in the past two decades, oil consumption has exploded in countries like China and India, prompting the need for greater supplies. In addition, a US shale surge has also partially modified the dynamics of the world’s oil market.

MAJOR PAST INCIDENTS

  • During the 1980-1988 Iran-Iraq war, the two sides sought to disrupt each other’s oil exports in what was known as the Tanker War
  • In July 1988, the U.S. warship Vincennes shot down an Iranian airliner, killing all 290 aboard, in what Washington said was an accident and Tehran said was a deliberate attack
  • In early 2008, the United States said Iranian vessels threatened three U.S. Navy ships in the Strait
  • In July 2010, Japanese oil tanker M Star was attacked in the Strait by a militant group called Abdullah Azzam Brigades linked to al Qaeda claiming responsibility
  • In January 2012, Iran threatened to block the Strait in retaliation for U.S. and European sanctions that targeted its oil revenue in an attempt to stop Tehran’s nuclear program
  • In May 2015, Iranian ships seized a container ship in the Strait and fired shots at a Singapore-flagged tanker which it said damaged an Iranian oil platform
  • In July 2018, President Hassan Rouhani hinted Iran could disrupt oil trade through the Strait in response to U.S. calls to reduce Iran’s oil exports to zero
  • In May 2019, four vessels – including two Saudi oil tankers – were attacked off the UAE coast near Fujairah, one of the world’s largest bunkering hubs, just outside the Strait of Hormuz.

(Source: Gulf News and Kataeb.org)

Sea News Feature, July 12